Haha, nice question. I love hearing about projects like these.As a small aside, I remember reading about an open source project that got CPython(The standard python implementation) to run on bare-metal and were working on building an OS in python :) Sadly I've lost the link since.
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FalainaJul 17 '09 at 7:59

Unlike SANOS, the JNode operating system is a full operating system with many supported devices, file systems, a network stack, a GUI stack, a command shell and 50 or so commands, and much more. JNode currently runs on x86 (32 bit) with one processor enabled, but x86-64 and multi-processor versions are in development. (JNode is 99.99% Java. Porting to a new architecture would entail rewriting the 0.01% of code that is in assembler, creating / modifying hardware specific drivers ... and writing a native code compiler for the new architecture.)

We currently have ~7 active developers, but we are always looking for new people to join the team, especially people who understand Java AND code generation, garbage collectors, drivers and so on.

(And for what it is worth, we use a recent version of the OpenJDK class libraries: 1.6u24 at the last count.)

Gained with Oracle's acquisition of BEA Systems ...
Oracle has resuscitated avant-garde
virtualization technology: a Java
Virtual Machine that runs directly on
the hypervisor, without an operating
system.

JVM is a virtual macjine which actually run over a system. It may be windows or solares x86 platform.
But as far as i know JVM itself act as a system for the Bytecode that we compile. For a byte code JVM virtualise its own ALU, Heap, Stack extra. It even have its own machine and assmbly language.

So some how if we able to realize a JVM specification on a Hardware chip then it will not be JVM anymore but i will become standalone Java Machine over which we can develop a operating system 100% written in java.

So in this case JVM will not be an OS but a System which directly understand java bytecode.